France’s Airbnb Is Poised To Be Its Next Big Fail

Eline Chivot June 15, 2020
June 15, 2020

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Editor’s Note: A version of this article was published by French media outlet Contrepoints on June 14.

As part of its economic recovery plans, the French government recently released a €1.3 billion package to stimulate the tourism industry. Part of this package includes the idea to build a state-run travel site for tourists wanting to visit France, and meant to rival Airbnb, TripAdvisor, and Booking.com. The news raised no eyebrows in France, where proposals aiming to go after large American tech firms go a long way in popularity, and many still believe that trying to yet again build the next Google is a worthwhile project.

Unfortunately, the “French Airbnb” is a bad idea. It is based on politically biased motives and a misguided application of industrial policy, seeks to dominate a market that is longer up for grabs, will fail for lack of credibility and, even if it were to succeed, it will not add value for consumers.

First, “France’s Airbnb” is a classic case of how France applies industrial policy—by trying to create or pick “national champions,” giving a shot in the arm of its companies, and injecting it with free public funding to build something that isn’t innovative, for the sake of battling foreign firms. The motivations behind the project are problematic. The French government has a history of leading crusades against large technology firms (derisively called “GAFA”). The problem, French policymakers say, is that these companies infringe on France’s sacrosanct technological sovereignty (whatever that means), avoid taxes, collect too much data and keep it all to themselves, and do not protect privacy, even though these companies must and do comply with EU privacy laws.

These indictments often reflect a bias conducive to “French-first” attitudes and policies that discriminate against foreign companies by tilting the playing field back in the favor of domestic companies. The main reason behind those attacks is that the French government doesn’t like big technology firms very much, especially because most are not French, and even worse, are American.

Second, with its new project, France is shooting at the wrong target. Blinded by its obsession for technological sovereignty, the French government aims to send its propped up industry off to war with big U.S. firms rather than encourage its companies to build useful innovations in areas of the economy where they stand a chance to lead and compete. France is likely too late to vault into the lead with business-to-consumer platforms like Airbnb: The market, championed by U.S. and Chinese firms, has reached maturity. Both French and European information technology firms have largely missed the last technology wave (e.g., computing, Internet, mobile, cloud). Rather than try to invent the next Facebook or replicate Google, France should double-down its efforts to commercialize emerging technologies like artificial intelligence, and position itself in the business-to-business platform race. France, like the EU, should direct investments to support digital innovation in the industries and technologies where it can build on core competencies, such as robotics, autonomous systems, high-performance computing, the Internet of Things and in key application areas, for instance health IT, smart grids, smart cities, and e-government. After all, France is home to world-leading tech companies such as Atos and Schneider Electric. If it wants to help French technology firms, it should make the French government and public sector infrastructure the most technologically modern in the world, including by making the electric grid smart and the government digitally savvy.

Third, a French Airbnb is unlikely to be credible and commercially viable. Creating a platform from scratch, with no specific timeline, and that should be at least on-par with Airbnb or Booking.com’s fluid and seamless interfaces to convince consumers to use it, is quite a way to gamble with taxpayers’ money. According to the government’s financial institution in charge of the project, it will take months to be “worthwhile”—while what the tourism industry currently needs to survive is efficient support, fast. In addition, while France does have a few “digital champions” such as Atos or OVH, no French-grown tech platform has been truly successful in scaling up beyond its borders, and the country has a history of failed initiatives such as its would-be Google-killer Quaero, or its cloud challengers Numergy and Cloudwatt. Seven years after its launch, search engine Qwant managed to grab an astonishing 0.73 percent market share, and now relies on governmental life support and Microsoft’s Bing to stay afloat. France may have thrown away millions of Euros on these quixotic schemes, but continues to go by the same playbook and to bet on the wrong horse—if only a “French Airbnb” was an isolated case. Salto, the so-called “French Netflix” which should have been launched in 2018, is facing delays and limited resources. The French may be the only ones who will end up knowing about their own Airbnb platform—as one more case in point of how their government wastes taxpayers’ money.

Finally, the project’s biggest accomplishment will likely be to reinvent the wheel and complicate the life of consumers. According to the project’s proponents, the platform should help the “German tourist who, on a visit to Colmar, needs to know where the breweries are, and the Isenheim museum’s opening hours.” But this German tourist may already be using other platforms such as TripAdvisor, Expedia, or Trivago that offer accommodation, ideas for things to do, and reviews of restaurants. How would one more platform offering similar services make the German tourist’s life easier?

Anti-big tech knee-jerk crusades lead to unfortunate ideas that further distracts the French government from what would really help the country compete in the digital economy. France’s Airbnb is likely to fail, to undermine to the tourism industry, and to be a disservice to French consumers and taxpayers. This is the kind of pain none of them really needs these days.